Senator Warns of Email Tax This Fall

cnet-declan writes "State and local governments in Washington this week began an all-out lobbying push for the power to tax the Internet, according to our article at News.com. A new Senate bill would usher in Internet sales taxes, and the Federation of Tax Administrators (representing state tax collectors) advised senators at a hearing on Wednesday not to renew a temporary moratorium limiting broadband taxes that expires in November. One irked Republican senator warned that unless the moratorium is renewed, we could start seeing email taxes by the end of the year. Former House Majority Leader Dick Armey blames it on the Democrats taking over, as do Yahoo and eBay lobbyists. Is this a non-hoax version of bill 602P?"

Comments

Fine: Define email

[panxerox]

They still don't get it, the Internet is not this easily defined thing that you can wrap thier minds around, its not about formats or drm or even email its about information. Anything thats describable as 1's and 0's can be transmitted over the internet, its like saying everytime you call a cab over a landline phone you have to pay a tax, uh no. How many ways can you now transmit info over the net now (?) its nearly infinite.

Re:Fine: Define email

[AKAImBatman]

I stand corrected. Still, a single throwaway line about email taxes doesn't seem like it should be eclipsing the real taxation issues. Those issues are the possibly taxation of goods sold across state lines as well as the taxation of internet connections themselves. Internet access is expensive enough already without the government trying to skim off the top, and shipping fees already wipe out any savings realized by a lack of taxes and "brick & mortar" overhead on goods.

I can't see how allowing internet taxes would do any good other than to have states fight over who should collect the taxes on an item shipped over state lines.

Re:Fine: Define email

[Kadin2048]

The thing is, the constitution is clear on this. The states don't have a right to charge taxes on stuff shipped across state lines. Why are we even having this discussion?

You are correct -- the states can't charge tax on goods shipped across their borders. I.e., they can't have a "California import tariff," as if they were a separate nation from the rest of the country, or something.

However, the Court has allowed states to charge tax on goods used or consumed in their state. This is how sales tax works: they don't charge the tax when the widgets cross the border from the neighboring state -- that would be illegal due to the Constitution -- but they charge the tax on the sale when it occurs in the state, or on the use of the item if you bought it elsewhere and are using it in the state. (Most people don't realize this, but if you buy something via mail order and use it in a state that charges sales tax, you're legally obligated to pay the same tax rate on it, only as a "use tax" instead of a "sales tax." All states that have sales taxes also have use taxes.)

That's how they get around the unconstitutionality. If it seems like hair-splitting, I'd probably agree with you, and there's a chance that if states really started getting obnoxious with their tax structures, to the point where it was interfering with commerce between states, then the USSC could step in and basically say that they have de facto violated the Constitution by creating barriers to trade ... but I wouldn't hold your breath.

Re:Fine: Define email

[shaitand]

Yes, and your phone company pays taxes per minute on any call that crosses a LATA line. Hence the original poster was correct in saying that taxes are charged per minute.

New protocol could kill spam

[Lt.Hawkins]

If one protocol is taxed, we can push another protocol to take over. Imagine, if email is taxed, having the entire industry shift to a better system that is not regulated, and having the opportunity to design much-needed controls and authentication in to eliminate spam.

Re:One doesnt justify the other

[LWATCDR]

"Right now ALL retailers and people are required to pay sales tax on out of state items (depending on your state)"
Ummm... Huh?

States are forbidden from taxing interstate commerce. In some states if you buy something from out of state you the customer are supposed to pay the tax.

How can ALL the Retailers be required to pays sales tax on out of state items (depending on your state)?
1. I don't think you know what the world ALL means.
2. It isn't true. You must pay sales tax if you have a presence in that state. If you have a store, sales rep, office, or warehouse.

Typical Political FUD

[lord_mike]

If the moratorium expires, one ardent tax foe is predicting taxes on e-mail. A United Nations agency proposed in 1999 the idea of a 1-cent-per-100-message tax, but retreated after criticism.

"They might say, 'We have no interest in having taxes on e-mail,' but if we allow the prohibition on Internet taxes to expire, then you open the door on cities and towns and states to tax e-mail or other aspects of Internet access," said Sen. John Sununu, a New Hampshire Republican. "We need to be honest about what we're endorsing and what we're opposing."

When reality doesn't side with your politics, you just make stuff up or pull it out of your behind.... Kudos to the senator's staffer who found an 8 year old story and make it sound like an "impending threat of dire circumstance!" when it is complete fiction.

None of these proposals "tax"... The two issues are whether sites like Amazon.com should collect sales taxes for out of state sales (like any major catalog company like Sears has been doing for generations), and whether municipalities can tax internet access like they do phone and cable... The original moratorium was designed to encourage greater participation in the Internet. that goal has been accomplished, and further subsidizing it probably makes little sense.

Yes, it sucks.... no one likes paying taxes, but the roads don't get built by themselves, and the cops don't protect your house for free. The money has to come from somewhere.

Thanks,

Mike